Labor Bill Needs Work

There is no denying the brutal conditions of some garment sweatshops in California. State and federal inspectors have documented pay far under the legal minimum, pervasive failures to pay overtime and unsafe working conditions, fueled by intense competition and immigrant labor. It is these conditions a proposal in the state Legislature means to correct.

The so-called underground economy bill, sponsored by Sacramento Democrat Darrell Steinberg and backed by unions and other workers’ rights organizations, is a grab bag of useful small reforms and big gestures that go too far--particularly in shifting civil liability for the failures of garment contractors onto clothing designers and retailers.

The bill easily passed the Assembly Labor and Employment Committee earlier this month, and similar bills passed the Legislature previously, only to be vetoed. But before this measure hits the new governor’s desk, retailers, manufacturers and labor advocates have agreed to sit down and negotiate. A compromise with teeth should come out of the talks in the next few weeks.

Backers of the bill argue persuasively that state and federal regulators have failed to improve sweatshop conditions. The state labor commissioner’s office is understaffed. Many contractors are unregistered and the state registration procedure has little bite. An industry self-monitoring project has had only a minor positive effect. When employees try to make claims against the worst contractors, the employer may declare bankruptcy and reopen the next day or week under a new name.

Attempting to correct all these failures, the bill could make designer/manufacturers and some retailers--from J.C. Penney to Bloomingdale’s--who design and oversee the making of private-label clothing liable in civil suits for the sins of their contractors. In the case of contractor bankruptcies, claims of employees would precede those of banks, a poor decision since that could disrupt lending.

Both sides should consider other possibilities. Staffing and funding for the state labor agency have been stagnant for years. To make tougher regulation pay for itself, a ludicrously low initial contractor registration fee of $150 and lower annual renewals should be increased, even to several thousand dollars, which would admittedly thin out marginal operators.

The fee would allow robust state oversight and help fund indemnification of aggrieved workers. Retailers and manufacturers could also kick into an indemnification pot, or find some other way to help assure that workers are paid as the law requires.

Other parts of the bill, to ensure that piecework rates are reflected on paycheck stubs, increase penalties for failure to pay overtime, toughen confiscation of illegally manufactured goods and expand criminal penalties for failure to register, deserve quick passage. The liability and bankruptcy provisions go too far. But they’re what the garment industry might face unless effective measures are devised to stop the worst of worker abuses.